TOKYO, Nov 29: Japan unveiled its agenda to restore health to its bad loan-laden banking sector Friday but revealed little in the way of specific measures.

Under the timetable, the government will set up a task force of lawyers and financial experts next month to investigate ways of injecting public funds into weak banks.

It makes clear that immediate action would be taken to bail out lenders under the current legal framework if necessary.

At present, banks can only receive an emergency cash injection if they ask for it or the government declares a financial crisis at present. Banks have in the past been reluctant to admit they face serious problems by asking for public funds.

The timetable, already widely leaked in the press, follows the announcement last month of plans by financial services and economy minister Heizo Takenaka with the aim of halving the ratio of bad loans at banks by March 2005. As part of the initiative, Tokyo plans to work out guidelines to convert preferred stocks held by the government into ordinary shares.

Major banks issued preference shares to the government in return for public fund injections in 1998 and 1999, and conversion to ordinary shares could amount to effective nationalisation.

A decision will also be made in six months on a legal framework allowing banks to receive fund injections ahead of aggressive bad loan disposals.

Bad loans at banks, conservatively estimated by the government at around 43 trillion yen are cited as a root cause of the nation’s 12-year economic slump.—AFP